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Last month, the Daily Yonder offered a short history of Universal Service in telecommunications in the U.S. Due to the high costs of providing services in many areas of the country, private network owners have never demonstrated an interest in providing universal service, leading to various government initiatives to expand access to telecom networks.

One of the reasons we support publicly owned networks is because we strongly believe in universal service. Universal access to fast and affordable broadband is an important goal for a variety of reasons, not the least of which is its potential to democratize and enhance educational opportunities.

Readers of this site undoubtedly recognize why fast and affordable access to broadband is important to people in rural areas. What is often forgotten is why people who already have access to such broadband should care about extending access to those who don't yet have it -- aside from simply caring about fellow Americans.

There are actually self-interested reasons why everyone should support extending networks into rural areas. Perhaps the best reason is something called the "network effect" which refers to the principle that the value of a network increases as more users join. One example of this is the telephone, where a telephone network becomes more valuable as more people are on it - allowing subscribers greater access to each other.

Another benefit rooted in self-interest is analogous to benefits of rural electrification. When publicly owned electrical networks electrified the country-side, new markets were created as people with electricity began buying appliances, creating a demand for more products and services. Though the effect may not be as strong with broadband, the new technologies will create new markets, creating more opportunities for everyone.

I do not suggest these self-interested motivations are the sole or best reasons for universal service, but I also want to make sure they are part of the discussion because we all benefit by ensuring everyone has access to these essential infrastructures.

To return to the Daily Yonder piece, it notes the beginning of universal service (and also the importance of "interconnection"):

After reading an impressive article in the South Washington County Bulletin, I am convinced that most Americans now understand that broadband is essential infrastructure for communities. Don Davis' "Speedy Internet could boost rural Minnesota" is a lengthy and thorough discussion of why every community needs broadband connections.

He starts by noting the MN Broadband Task Force, which found that the state should make sure broadband access is ubiquitous in the coming years at minimum speeds considerably above what is available currently in most of Minnesota. What it lacked was a suggestion of how to get there.

Don delves into the Lake County solution:

A northeastern Minnesota county is doing just that and may have the answer, at least for those in the "second Minnesota."

Lake County hopes to blaze a trail to a faster Internet with private businesses paying most of the cost.

County officials want to lay fiber optic cable, capable of carrying high-speed signals, to every home and business with electricity. If it happens, Lake County could become a model not only for Minnesota but the country by offering its rural citizens the same service as their big-city cousins receive.

As detailed in the article, Lake County has lost economic development opportunities precisely because they cannot guarantee fast and affordable connectivity to those who otherwise want to locate there.

What he does not make clear is that Lake County will own this network. It will be operated by National Public Broadband - a nonprofit. The private sector is not interested in bringing true broadband to the North Shore and local citizens should be glad of it - they will get a far superior network than Qwest could have built.

Once the public builds this fiber network (using private sector contractors), other private sector companies will provide services over it. This is a good model - the public builds the infrastructure and allows private companies to deliver services. The public can ensure everyone has equal access by physically connecting every residence and business.

Unfortunately, one of the MN Task Force members - who should know better - is quoted as saying it isn't "financially feasible" to build fiber to every home. What is or is not financially feasible is...

I have just submitted comments from the Institute for Local Self-Reliance to both the the National Telecommunications and Information Administration (NTIA) and the Rural Utilities Service (RUS) regarding suggestions for rules in round two (the last round) of the broadband stimulus programs -- the Broadband Technology Opportunities Program (BTOP - administered by NTIA) and Broadband Initiatives Program (BIP - administered by RUS).

RUS and NTIA released a joint Request for Information (RFI) seeking comment on further implementation of the Broadband Initiatives Program (BIP) and the Broadband Technology Opportunities Program (BTOP). Comments must be received by November 30, 2009. The input the agencies expect to receive from this process is intended to inform the second round of funding.

We offered five pages of comments, responding directly to the questions - I am led to believe that this is the preferred way of responding to such requests for information. Thus, the format consists of a short introduction and then questions (in italics) followed by our responses.

Unsurprisingly, we generally encourage NTIA and RUS to better serve the public interest by requiring more transparency in the second round. We also call on them to stop accepting "advertised" speeds in their broadband definition and use actual delivered speeds in order to ensure communities are not discouraged from applying because their incumbent providers exaggerate the capabilities of their network.

Most importantly, we call on NTIA and RUS to encourage public sector entities to apply by ceasing to consider all private networks to operate in the public interest. As we previously documented here, NTIA subverted the intent of Congress with the rules from round one. The rules should prefer public and nonprofit entities as they are directly accountable to the public and should therefore be the first in line to receive public money for essential infrastructure.

As the number of applications to NTIA and RUS was far higher than expected, making the public interest requirements stronger should be a natural...

The project adds redundancy in a rural area where telecommunications infrastructure tends to be ignored by the private sector.

“The broadband expansion fortifies the existing fiber route between BVU and Citizens as well as giving our area a redundant fiber-optic line to Northern Virginia, where bandwidth needs are increasing all the time. It is necessary to our region’s future and the survivability of our existing telecom network,” he [Virginia Delegate Terry Kilgore] noted.

BVU was the first municipal network in the U.S. providing the triple-play over a full fiber-to-the-home network.

Conducted by Brown Edwards & Co., certified public accountants, the audit revealed increased revenues and no surprises, partner and accountant Richard Linnen told the BVU board of directors at its Monday meeting.

“It was a clean opinion and an unqualified audit, as it is every year,” Linnen said.

Such independent audits are a useful exercise to ensure these essential networks are operating efficiently and accountably. Additionally, these audits are useful to refute false claims of impropriety from private sector companies looking to discredit publicly owned networks.

First off, compared to the VTel project, I'm immediately inclined to favor ECF's by the simple fact that they're a public project, which the original stimulus language suggested should get priority, and they're looking for a loan rather than a grant, and I think so long as a project will be self-sustaining, it's always better to loan money that you'll get back some day than to just give handouts of free money. I also prefer ECF's project because they're going to be bringing fiber to every home in their service area. They're not going to leave anyone behind, creating second-class digital citizens. Finally, I think that ECF's project has a greater chance of establishing a model that the rest of the country can learn from, proving both that fiber can be economical in rural areas and that open multi-service networks can be financially viable.

The new federal funds will be managed by the Vermont Center for Geographic Information (VCGI) to implement the Vermont Broadband Mapping Initiative, a collaborative broadband data collection and verification effort involving partners from the public, private and academic sectors. This team -- VCGI, the Vermont Telecommunications Authority, the Vermont Department of Public Service, the University of Vermont’s Center for Rural Studies, and Vermont’s Enhanced 9-1-1 Board -- will use the latest technology to create a comprehensive and verified broadband availability map.

In a recent post the NY Times Bits Blog, Saul Hansell reports "Verizon Boss Hangs Up on Landline Phone Business" - something we have long known. Nonetheless, this makes it even more official: private companies have no interest in bringing true broadband to everyone in the United States.

Verizon is happy to invest in next-generation networks in wealthy suburbs and large metro regions but people in rural areas - who have long dealt with decaying telephone infrastructure - will be lucky to get slow DSL speeds that leave them unable to participate in the digital age. These people will be spun off to other companies so Verizon can focus on the most profitable areas.

For instance, Verizon found it profitable to spin off its customers in Hawaii to another company that quickly ran into trouble before unloading most of its New England customer on FairPoint, moves that enhanced Verizon's bottom line while harming many communities (see the bottom of this post and other posts about FairPoint).

Isen also delved deeper into Verizon's actions, with "Verizon throws 18 states under the progress train." He is right to push this as a national story - the national media focused intently on the absence of major carriers in the broadband stimulus package but they seem utterly uninterested in major carriers running away from broadband investments in rural areas.

Though Frontier likes to position itself as a company focused on bringing broadband to rural areas, it offers slow DSL broadband and poor customer service to people who have no other choices - more of a parasite than angel. As long as we view broadband as a vehicle for moving profits from communities to absentee-owned corporations rather than the infrastructure it truly is, we will farther and farther behind our international peers in the modern...

This report was written by Ciara Torres-Spelliscy, Esq. and Marjorie Heins, Esq. of the Brennan Center for Justice at NYU School of Law to inform a Nebraska Task Force tasked with evaluating a ban on municipally owned broadband networks throughout the state of Nebraska. Unfortunately, the Task Force was stacked with proponents for privately owned networks and seemed unable to consider any other viewpoints (more details here). From the Executive Summary:

While the provision of broadband service by public entities is a contentious topic, there have been no comprehensive studies of municipal broadband service providers that would provide easy answers to policy makers. Instead researchers have considered single cities or one type of provider. There are several reasons for the dearth of comprehensive studies. One is that the technologies involved are so new. Another is that indispensable data sets are often proprietary, confidential or nonexistent. To aid the Task Force in its duties, we have gathered information from the publicly available sources. To supplement these data sets, the Brennan Center distributed a questionnaire (the “Brennan Center Questionnaire”) to the Nebraskan members of the Center for Rural Affairs and Common Cause to gather information about the challenges experienced by Nebraskan Internet users.

...

In Part I of this white paper, we will explore the status of broadband deployment both nationally and in Nebraska. We have found that some Nebraskans lack access to broadband providers and others live in areas where there is unaffordable broadband service. A significant minority (43% living outside of towns in 20054 and 7.4% of Nebraskan towns in 2006 according to the Nebraska Telecommunications Association) lacked access to broadband service. These numbers most likely understate the magnitude of the problem because of the reporting methodologies used. Around half of Nebraska’s towns are only served by a monopoly wired broadband provider who can charge high prices for broadband service.

The data also demonstrate that rural Nebraskans in particular are more frequently priced out of the broadband market than their urban counterparts. Those living in small Nebraskan towns and in the countryside, and even many living just outside larger Nebraskan cities are faced with unaffordable broadband service. The advent of satellite Internet service...

The implication of the title - "Major Carriers Shun Broadband Stimulus: Funds would come with tighter rules" is because of the rules. I'm sure she didn't write the title or sub, that usually goes to the editor. But it would appear whoever wrote the title did not read the piece because she shows that the rules are a minor factor at best.

Unfortunately, Kang also makes a significant error in not appearing to have read the stimulus legislation because she seems surprised that major carriers are not interested in the stimulus. The stimulus was emphatically not targeted at those carriers. As I detailed here previously, Congress intended the stimulus to boost public and nonprofit investments though private carriers could apply if they met a public interest requirement - an intention that NTIA ignored when making the rules. Reading the legislation, it was never aimed at the large carriers so their lack of interest is no surprise -- unless you are Robert Atkinson of the Information Technology and Innovation Foundation...

"If you want to get broadband out, you have to do it with [those] who brought you to the dance in the first place, and in this case it is the incumbent cable and telephone carriers who have 85 percent of lines in the country," said Robert Atkinson, president of the Information Technology and Innovation Foundation, a Washington tech policy think tank.

Many people in rural areas get their phone services from a cooperative telephone company. When it comes to fiber in rural areas, some of these cooperatives are on the cutting edge. The July Issue of FTTH Prism [pdf] from Chaffee Fiber Optics has a feature on Paul Bunyan Telephone in Minnesota. They are an aggressive broadband network deployer in rural areas, often saving residents from Qwest or another company unable (sometimes just unwilling) to build these necessary networks.

Cooperative telephone companies fall into our understanding of publicly owned because they focus on their communities first and do not seek to maximize profits at the expense of social benefits.

Paul Bunyan Telephone is nearly 60 years old and now covers over 4,500 square miles. They have used RUS loans to finance significant portions of the network.

Currently, over 4,000 locations are served with our fiber-to-the-home network, which represents about 30 percent of our entire network. For these customers, thanks to the benefits of fiber optics, we can deliver high-speed Internet services up to 40 Mb (both upload and download) and a host of advanced television services including multiple streams of high-definition television, digital video recording, and on-demand services.

For those who claim that people in rural areas just don't understand broadband or don't want it, this company has an answer:

One specific example the fiber optic network capacity can have on a business is Northwood DNA, Inc. This is a business operating in a very rural area, Becida, MN, that provides DNA sequencing and genotyping services globally. The services they provide require receiving and sending large data files electronically. Prior to the deployment of the fiber optic network, their business was only able to report two to three test results per day. Today, with the benefits of the all fiber optic network, they report over 50 test results per day.

Windom, a small community of only 5,000 people in southwestern Minnesota, upgraded its city-owned cable network to a fiber-to-the-home system. They issued $9.4 million in revenue bonds (of which $800,000 were just for the first two years of interest, when no revenue is generated from the system being built) to pass 2,000 homes and 300 businesses.

But, as with so many other aspects of life, the story was more interesting than that.

Before Windom could formally dedicate resources to address its communications challenge, however, the city was required by state law to obtain a two-thirds majority vote of approval from its citizens. Largely due to the incumbent [Qwest] telecommunications operator's announcement that it would upgrade its infrastructure and roll out digital subscriber line (DSL) services in Windom's area, the initial vote in 1999 on a new city-owned network failed. But after the incumbent cancelled its plans for DSL [while building DSL in other nearby communities], a citizens group petitioned Windom's city council to put the telecommunications project back on the ballot. In spring 2000, Windom received approval by the voters to begin work on a next-generation broadband communications infrastructure project.

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We are broadcasting local sports on our cable system and have connected many new customers because of it. With our fiber system we can bring customers live audio and video of not only sports but also community events. This has been a very popular service for our community...